Since its introduction over 125 years ago, electricity has provided the energy behind dramatic growth, our thriving economy, and our enviable standard of living.
The construction of the first generation, transmission and distribution facilities had a phenomenal impact on the lives of citizens. Understanding how electricity so quickly and definitively transformed our lives is fundamental to understanding the role electricity continues to play, and how that role will unfold in the lives of our children and future generations.
Our rich electricity tradition continues today, as our industry refines and redefines itself to meet the new challenges shaping our world in a responsible manner, and with the interests of our communities at heart. Meeting new demand must be approached through sustainable, reliable, secure and cost-effective ways, and this can only be achieved through a common agenda between industry and government. As electricity demand continues to grow, we must build on our strong foundation through collaboration and innovation to ensure our future electricity supply.
Decisions to Meet Future Demand
When our electricity infrastructure began to take shape in the late 1800’s, the lives of citizens were transformed by such innovations as the telegraph, incandescent lights, streetcars, the electric oven, movies and radio, to name a few. In the case of Canada, from 1920 to 1960, the demand for electricity grew by about 7% each year, forcing utilities to double their grids sixteen times over. Commercial demand, especially in the retail trade and service industry, jumped 600% from 1957 to 1974. As our economy and lifestyle continued to require more and more power, the trend persisted. From 1990 to 2003, Canada’s total domestic electricity demand grew by 19.2%. Despite gains in energy efficiency, national demand is projected to grow at an average annual rate of 1.0-1.5%..
In order to meet electricity needs over the next 20 to 30 years, the electricity sector and government must collaborate on an effective electricity policy framework. We need to build to meet future demand growth, as well as upgrade or replace aging generation, transmission and distribution capacity built over the last 50 years. Replacing or refitting old power plants, achieving environmental approvals to build new facilities on new sites, ensuring the transmission and distribution infrastructure keeps pace with electricity generation, and developing new technologies to minimize environmental impacts and maximize efficiency all take time and significant capital investment. If we do not succeed today in attracting the necessary investment to finance tomorrow’s electricity infrastructure, our competitive economy and standard of living may be at risk.
The Investment Imperative
Current generation, transmission and distribution decisions must be made to meet this future challenge in a context where a significant portion of the existing infrastructure will be retired or renewed over the forecast period. Despite the clear need for investment in the electric power sector, recent capital expenditures in electric power production, transmission, and distribution have remained relatively flat since the mid 1990s, in contrast with capital investment in the oil and gas sectors.
Investment in generation must account for both refurbishment of existing facilities and the addition of new capacity. Given long planning and construction lead times, ensuring an efficient, diverse and reliable power supply for tomorrow depends on investment decisions made today. Meeting future electricity demand will mean new generation in addition to energy efficiency and demand side management (DSM) measures. To ensure sustainability and reliability, this new supply will also need to be met by a broad spectrum of fuel types. Opportunities for fuel diversity will vary significantly across regions, depending on a range of factors, including fuel availability, geography, environmental concerns, technical feasibility and reliability, market structure and political climate.
Meeting demand into the future will also require significant investment in transmission and distribution infrastructure. Investment in new generation is predicated on a reasonable expectation that power can reach consumers cost-effectively. As it becomes increasingly difficult to acquire new rights of way for green-field transmission, the sector must also invest in new technologies in order to increase the capacity of existing transmission corridors and to optimize the regional grids. As the August 2003 blackout clearly illustrated, a reliable transmission system is vital to serve both the domestic and North American power markets.
The IEA estimates that the investment requirement in transmission and distribution in Canada and the United States will reach US$910 billion by 2030. Such investment is critical in delivering electricity to market. The Conference Board of Canada recently identified a number of impediments to investment in Canada’s transmission infrastructure, although they apply to non-transmission assets as well. The obstacles include: long planning horizons to obtain regulatory approval; low regulated rates of return for investors when compared to the United States; difficulties in acquiring capital financing; and regulatory uncertainty in the face of continuing market restructuring.
The International Energy Agency (IEA) estimates that over the next 30 years, the need or investment in the electricity sector worldwide will approach US$10 trillion, with US$1.7 trillion required in the United States and Canada.
Distribution Systems: Into the 21st Century
Our existing distribution infrastructure was designed to move electricity one-way from transmission lines to end-use consumers prior to the astounding advances of the information age. Because the end-use market consumer is increasingly digital-dependent, the current distribution system is challenged to deliver high-value bundled services to an increasingly segmented consumer base, for instance, by delivering in the future both electric and telecommunication technologies such as broadband over power line (BPL) communications.
Distribution utilities must adapt to stay competitive in this new environment. To survive, the distribution system will need to manage electricity flows in real-time using an intelligent, reliable, two-way distribution infrastructure to support a digital society. The power network of the future will be real-time, responsive, adaptive, eco-sensitive, flexible, price-smart, self- diagnosing, self-healing and interconnected. Meeting this challenge will require significant investment in such initiatives as distribution automation and automated meteringtechnologies (AMT).
Governments at all levels are continuing to push distribution companies for improvements in reliability, cost of service, power quality, consumer service and safety. The regulatory treatment of industry investment in technology does not always encourage innovation, and this lack of investment is problematic as the distribution infrastructure ages.
CEA is recommending a distribution utility/supplier/government partnership to accelerate innovation, investment and implementation for electricity distribution infrastructure automation, AMT technology, BPL communications services, distributed resources interconnections, as well as regulatory innovation in support of sustainable development, customer choice and economic opportunities.
Innovation, Improving Efficiency and Reducing Environmental Impact
At the present time, there is no technology available to deliver electricity at the scale society requires without having some impact on land, water, air, habitat, and/or local communities. A diverse generation mix grounded in regional resources and opportunities, and backed by robust transmission and distribution systems, will best serve the needs of customers in all regions for reliable, affordable, low environmental-impact electricity.
Due both to natural regional endowments and the economics in favour of maintaining a diverse fuel portfolio, electric power production in Canada is a multi-fuel exercise. Hydroelectric power’s prominence in Canada (providing 60% of Canadian electricity versus 7% in the United States) means that significant Canadian energy requirements are met without producing greenhouse gases (GHGs) or air emissions. Nuclear generation also has an important role to play in managing the sector’s GHG and other air emissions, as it provides approximately 13% of the electricity generated in Canada, and 21 % of the electricity produced I the United States. Investments in low-emitting technologies such as clean coal, CO2 capture and storage, and highly efficient Combined Cycle Gas Turbines also promise a cleaner and exciting future.
Overall, our sector is intent on reducing its environmental footprint, which is dependent in part on regional endowments. An important first step is to ensure there is an accurate measure of our industry’s environmental impact. One example of this is CEA’s Environmentally Preferable Power Task Group which, in cooperation with Natural Resources Canada, is undertaking a major study aimed at measuring the environmental performance of a range of generation technologies within specific regional settings. In order to decrease the sector’s overall impact, we must support ongoing efforts to improve the performance of existing technologies, and also support new technologies that have a smaller footprint. We encourage opportunities for market access of energy generated from emerging renewable energy sources (e.g. wind, solar, biomass, biogas). CEA member companies, over the course of the last decade, have become the pre-eminent developers of wind power in Canada. This trend shows every sign of continuing as members advance major wind projects right across the country.
Advancing the Agenda
In order to sustain our competitive electricity advantage into the future, governments and the electricity sector need to collaborate on a sound public policy agenda that will ensure adequate supply, encourage efficient use of our energy resources, and promote environmental sustainability. This will necessarily involve a renewed attention to investment in the electricity sector. Refurbishing existing infrastructure, building new facilities to meet future demand, supporting technological innovation, and ensuring the viability of a skilled labour force are key issues on which industry and government must collaborate.
The construction of the first generation, transmission and distribution facilities had a phenomenal impact on the lives of citizens. Understanding how electricity so quickly and definitively transformed our lives is fundamental to understanding the role electricity continues to play, and how that role will unfold in the lives of our children and future generations.
Our rich electricity tradition continues today, as our industry refines and redefines itself to meet the new challenges shaping our world in a responsible manner, and with the interests of our communities at heart. Meeting new demand must be approached through sustainable, reliable, secure and cost-effective ways, and this can only be achieved through a common agenda between industry and government. As electricity demand continues to grow, we must build on our strong foundation through collaboration and innovation to ensure our future electricity supply.
Decisions to Meet Future Demand
When our electricity infrastructure began to take shape in the late 1800’s, the lives of citizens were transformed by such innovations as the telegraph, incandescent lights, streetcars, the electric oven, movies and radio, to name a few. In the case of Canada, from 1920 to 1960, the demand for electricity grew by about 7% each year, forcing utilities to double their grids sixteen times over. Commercial demand, especially in the retail trade and service industry, jumped 600% from 1957 to 1974. As our economy and lifestyle continued to require more and more power, the trend persisted. From 1990 to 2003, Canada’s total domestic electricity demand grew by 19.2%. Despite gains in energy efficiency, national demand is projected to grow at an average annual rate of 1.0-1.5%..
In order to meet electricity needs over the next 20 to 30 years, the electricity sector and government must collaborate on an effective electricity policy framework. We need to build to meet future demand growth, as well as upgrade or replace aging generation, transmission and distribution capacity built over the last 50 years. Replacing or refitting old power plants, achieving environmental approvals to build new facilities on new sites, ensuring the transmission and distribution infrastructure keeps pace with electricity generation, and developing new technologies to minimize environmental impacts and maximize efficiency all take time and significant capital investment. If we do not succeed today in attracting the necessary investment to finance tomorrow’s electricity infrastructure, our competitive economy and standard of living may be at risk.
The Investment Imperative
Current generation, transmission and distribution decisions must be made to meet this future challenge in a context where a significant portion of the existing infrastructure will be retired or renewed over the forecast period. Despite the clear need for investment in the electric power sector, recent capital expenditures in electric power production, transmission, and distribution have remained relatively flat since the mid 1990s, in contrast with capital investment in the oil and gas sectors.
Investment in generation must account for both refurbishment of existing facilities and the addition of new capacity. Given long planning and construction lead times, ensuring an efficient, diverse and reliable power supply for tomorrow depends on investment decisions made today. Meeting future electricity demand will mean new generation in addition to energy efficiency and demand side management (DSM) measures. To ensure sustainability and reliability, this new supply will also need to be met by a broad spectrum of fuel types. Opportunities for fuel diversity will vary significantly across regions, depending on a range of factors, including fuel availability, geography, environmental concerns, technical feasibility and reliability, market structure and political climate.
Meeting demand into the future will also require significant investment in transmission and distribution infrastructure. Investment in new generation is predicated on a reasonable expectation that power can reach consumers cost-effectively. As it becomes increasingly difficult to acquire new rights of way for green-field transmission, the sector must also invest in new technologies in order to increase the capacity of existing transmission corridors and to optimize the regional grids. As the August 2003 blackout clearly illustrated, a reliable transmission system is vital to serve both the domestic and North American power markets.
The IEA estimates that the investment requirement in transmission and distribution in Canada and the United States will reach US$910 billion by 2030. Such investment is critical in delivering electricity to market. The Conference Board of Canada recently identified a number of impediments to investment in Canada’s transmission infrastructure, although they apply to non-transmission assets as well. The obstacles include: long planning horizons to obtain regulatory approval; low regulated rates of return for investors when compared to the United States; difficulties in acquiring capital financing; and regulatory uncertainty in the face of continuing market restructuring.
The International Energy Agency (IEA) estimates that over the next 30 years, the need or investment in the electricity sector worldwide will approach US$10 trillion, with US$1.7 trillion required in the United States and Canada.
Distribution Systems: Into the 21st Century
Our existing distribution infrastructure was designed to move electricity one-way from transmission lines to end-use consumers prior to the astounding advances of the information age. Because the end-use market consumer is increasingly digital-dependent, the current distribution system is challenged to deliver high-value bundled services to an increasingly segmented consumer base, for instance, by delivering in the future both electric and telecommunication technologies such as broadband over power line (BPL) communications.
Distribution utilities must adapt to stay competitive in this new environment. To survive, the distribution system will need to manage electricity flows in real-time using an intelligent, reliable, two-way distribution infrastructure to support a digital society. The power network of the future will be real-time, responsive, adaptive, eco-sensitive, flexible, price-smart, self- diagnosing, self-healing and interconnected. Meeting this challenge will require significant investment in such initiatives as distribution automation and automated meteringtechnologies (AMT).
Governments at all levels are continuing to push distribution companies for improvements in reliability, cost of service, power quality, consumer service and safety. The regulatory treatment of industry investment in technology does not always encourage innovation, and this lack of investment is problematic as the distribution infrastructure ages.
CEA is recommending a distribution utility/supplier/government partnership to accelerate innovation, investment and implementation for electricity distribution infrastructure automation, AMT technology, BPL communications services, distributed resources interconnections, as well as regulatory innovation in support of sustainable development, customer choice and economic opportunities.
Innovation, Improving Efficiency and Reducing Environmental Impact
At the present time, there is no technology available to deliver electricity at the scale society requires without having some impact on land, water, air, habitat, and/or local communities. A diverse generation mix grounded in regional resources and opportunities, and backed by robust transmission and distribution systems, will best serve the needs of customers in all regions for reliable, affordable, low environmental-impact electricity.
Due both to natural regional endowments and the economics in favour of maintaining a diverse fuel portfolio, electric power production in Canada is a multi-fuel exercise. Hydroelectric power’s prominence in Canada (providing 60% of Canadian electricity versus 7% in the United States) means that significant Canadian energy requirements are met without producing greenhouse gases (GHGs) or air emissions. Nuclear generation also has an important role to play in managing the sector’s GHG and other air emissions, as it provides approximately 13% of the electricity generated in Canada, and 21 % of the electricity produced I the United States. Investments in low-emitting technologies such as clean coal, CO2 capture and storage, and highly efficient Combined Cycle Gas Turbines also promise a cleaner and exciting future.
Overall, our sector is intent on reducing its environmental footprint, which is dependent in part on regional endowments. An important first step is to ensure there is an accurate measure of our industry’s environmental impact. One example of this is CEA’s Environmentally Preferable Power Task Group which, in cooperation with Natural Resources Canada, is undertaking a major study aimed at measuring the environmental performance of a range of generation technologies within specific regional settings. In order to decrease the sector’s overall impact, we must support ongoing efforts to improve the performance of existing technologies, and also support new technologies that have a smaller footprint. We encourage opportunities for market access of energy generated from emerging renewable energy sources (e.g. wind, solar, biomass, biogas). CEA member companies, over the course of the last decade, have become the pre-eminent developers of wind power in Canada. This trend shows every sign of continuing as members advance major wind projects right across the country.
Advancing the Agenda
In order to sustain our competitive electricity advantage into the future, governments and the electricity sector need to collaborate on a sound public policy agenda that will ensure adequate supply, encourage efficient use of our energy resources, and promote environmental sustainability. This will necessarily involve a renewed attention to investment in the electricity sector. Refurbishing existing infrastructure, building new facilities to meet future demand, supporting technological innovation, and ensuring the viability of a skilled labour force are key issues on which industry and government must collaborate.
